JPMorgan partners Siemens to develop blockchain for payments

JPMorgan Chase has announced it has partnered with Siemens to develop a blockchain system for the company’s payments, in what the two companies have described as a first-of-its-kind application.

Heiko Nix, head of cash management and payments at Siemens, said the move will improve the automation needed in order to process the far greater number of payments it expects due to the growing popularity of payment models like pay-per-use.

“If the business would stay the same as it is today, I would say we are fine regarding our treasury set-up,” he said.

“We can automate a bit and maybe we reduce costs and cash allocation but this is not the reason why we are doing this.

“The reason is that we are seeing a huge change due to the emerging digital business models because we will no longer be able to forecast cash.”

The system will enable transferring money immediately between Siemens’ own accounts but right now, it is being used only for US dollars.

However, the company announced its future plans include allowing euro transfers in 2022.

The infrastructure was developed with Siemens by JPMorgan’s blockchain unit, Onyx.

Naveen Mallela, Onyx’s global head of coin systems, said this takes programmable payments beyond current uses like direct debits and standing orders.

“You want more flexible rules or flexible triggers, that is where the current infrastructure falls short,” Mallela explained, adding that JPMorgan had a pipeline of clients that it would like to offer the new system, but it chose Siemens for its first anchor client.